Reuters :
The war in Ukraine has dealt a major shock to commodity markets, altering global patterns of trade, production, and consumption in ways that will keep prices at historically high levels through the end of 2024, according to the World Bank’s latest Commodity Markets Outlook report.
The increase in energy prices over the past two years has been the largest since the 1973 oil crisis.
Price increases for food commodities-of which Russia and Ukraine are large producers-and fertilisers, which rely on natural gas as a production input, have been the largest since 2008, said the World Bank in a statement after the release of the outlook on April 26.
The report comes the time when Bangladesh, being an import dependent country for a number of key commodities, including petroleum, gas, wheat, edible oils, and fertiliser, faces increased imports costs, with inflation hitting 17-month high in March.
“Overall, this amounts to the largest commodity shock we’ve experienced since the 1970s. As was the case then, the shock is being aggravated by a surge in restrictions in trade of food, fuel and fertilisers,” said Indermit Gill, the World Bank’s vice president for equitable growth, finance, and institutions.
“These developments have started to raise the specter of stagflation. Policymakers should take every opportunity to increase economic growth at home and avoid actions that will bring harm to the global economy.”
Energy prices are expected to rise more than 50 per cent in 2022 before easing in 2023 and 2024, said the agency in its report.
Non-energy prices, including agriculture and metals, are projected to increase almost 20 per cent in 2022 and will also moderate in the following years.
Nevertheless, commodity prices are expected to remain well above the most recent five-year average. “In the event of a prolonged war, or additional sanctions on Russia, prices could be even higher and more volatile than currently projected,” it added.
